CGT: examples and other considerations 

Calculating Capital gains: An example

An example can help understand how property capital gains tax would work for an apartment bought on May 2, 2010 for €100,000, bearing in mind that the bill is divided into the main capital gains tax element (technically a form of income tax) plus social charges. 

If the apartment was sold in July 2025 for €150,000, it would qualify for reductions applying to a sale after 15 full years of ownership. 

This means:

Purchase price = €100,000 + 7.5% (purchaser’s expenses) + 15% (improvements) = €122,500 

Capital gain = €150,000 - €122,500 = €27,500

Taxable capital gain is reduced for capital gains tax purposes by 6% for each full year from the 6th to 21st, thus 10 x 6 = 60%.

60% x €27,500 = €16,500, thus taxable gain = €27,500 - €16,500 = €11,000

CGT at 19% is applied to €11,000 = €2,090 in capital gains tax.

A separate calculation has to be made for the social charges. 

A reduction of 1.65% is made for each full year from sixth to 21st, so 10 x 1.65 = 16.5%

16.5% x €27,500 = €4,537.50, thus taxable gain for social charges is €27,500 - €4,537.50 = €22,962.50

Social charges at 17.2% are applied to €22,962.50 = €3,949.55

Total bill = €2,090 + €3,949.55 = €6,039.55

In this example, the property would become fully exempt from income tax on May 2, 2032 (2010 + 22 years) and from social security charges on May 2, 2040 (2000 + 30 years).

Building land

Reader Question: I want to sell a plot of building land. How is capital gains tax worked out on this?

Depending on the circumstances, there can be a substantial taxable capital gain in the case of building land, especially where, due to changes in the local planning zones (plan local d’urbanisme) an agricultural area is now deemed constructible (suitable for building). In the latter case the increase in price usually makes up for the tax.

In general, a capital gain on land is subject to the same levies as sales of built property, including 19% of tax and 17.2% of social charges.

As with built property, the taxable gain is subject to progressive reductions based on how long you have owned the land, up to exemption from tax after 22 full years of ownership and after 30 years for social charges. There is, however, nothing to pay in the case of sales for €15,000 or less.

As with other property capital gains, you can add certain costs to the acquisition price and deduct others from the sale value. For example, money spent connecting the land up to utilities – called viabilisation – is deductible.

An additional deduction at 60% exists in zones under housing pressure if the purchaser agrees to build flats within four years (85% if half or more will be for social housing).

Note that an additional national tax is payable where someone sells for 10 times or more the original cost due to the reclassification of their land (a further local tax also applies in certain areas).

Capital gains declarations

Property capital gains are worked out and paid at the time of sale and the notaire takes charge of the declaration and payment of the tax for the sale of French property. 

The gains also have to be reported in your annual French income tax declaration in a special box, to be taken account of (but not to be taxed again). 

When it comes to capital gains in investments, these are declared in the annual French income tax return and are subject to the PFU flat tax (30%) or, if you select this option for all investment income in your income tax declaration, under the ordinary tax bands after reductions of the taxable gain for length of ownership.

In the case of certain foreign structures holding shares you must declare all shares sold within them as capital gains due to the ‘wrapper’ not being recognised by France.

Also note….

France’s exit tax

France applies a form of CGT on large unrealized capital gains when certain people, usually well-off businesspeople, leave the country. 

See section on the French wealth tax (chapter 13) for more on this ‘exit tax’. 

Assurance-vie

Assurance-vie is a popular savings arrangement in France – for good reason. Besides reducing income, succession and potentially wealth tax, it can be a powerful way to mitigate CGT.

If you own shares and investments directly, without the benefit of such a wrapper, every trade made on the portfolio should be declared and assessed for CGT, even if you are not taking withdrawals. 

Assurance-vie eliminates this problem since trades taking place within the structure occur without a tax liability. You only pay tax on withdrawals and then only on the growth element of the withdrawal. 

Read more about Assurance Vie in the chapter on banking (chapter 10).